Last round of EU/Mercosur useful, but key issues remain to be resolved

Talks ended earlier than expected, with Argentina and Uruguay leaving the table due to what they saw as a lack of decisiveness from Brazil and the EU.

The European Union and Mercosur have made some progress on how to open their markets to cars, but ended free trade talks in Brussels on Friday with finger-pointing about who was holding up a deal. The EU and the Mercosur bloc of Argentina, Brazil, Paraguay and Uruguay began on-off negotiations towards a trade alliance in 1999, with a fresh impetus since 2016.

The European Commission, which negotiates trade deals on behalf of the EU’s 28-members, described talks between chief negotiators from Tuesday this week as “useful”, but said key issues still had to be resolved.

“It should be clear that without any movement from our partners on these issues it’s difficult to see the process moving towards the outcome to which the European Commission remains committed – a balanced and ambitious EU-Mercosur trade agreement,” a Commission spokesman told a news conference.

Key gaps remain on how far to open each other’s markets to imports of cars and farm products, such as Latin American beef and EU dairy. The EU in particular wants to include maritime issues, access to public tenders and protection of food and drink names such as champagne or Parma ham, which it says can only be used for products made in particular areas.

One Mercosur said they had ended earlier than expected, with Argentina and Uruguay leaving the table due to what they saw as a lack of decisiveness from Brazil and the EU. Within Mercosur, cars are more sensitive for Brazil.

“Few items are left to conclude the agreement,” the source said. “The beef volume has already been agreed... at levels that are acceptable to the EU.”

The EU signaled earlier this year that it could open up its market to more beef from Mercosur countries Argentina, Brazil, Paraguay and Uruguay, raising its potential offer for beef access to 99,000t per year from a previous 70,000t, people close to the talks said.

The people said it was not clear how the tonnage would be split, such as between more expensive chilled and cheaper frozen meat, and whether tariffs would still apply. Beef has been a key demand for the Mercosur countries, but a concern for EU farming nations such as Ireland and France.

Another Mercosur source said the negotiations had made progress on cars, where differences include the period over which tariffs should be reduced and the minimum level of local content required.

“We have signaled to them that we can make some movement on things such as the timeframe and rules of origin, but perhaps they are not fully satisfied by this,” the source said.

“We are at the stage of negotiations when we are dealing almost exclusively with the hard stuff. You would not really expect breakthroughs to happen out of the blue.”